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The Disappearing Middle Class


The other day I was watching television and saw a special on nuclear-powered aircraft carriers. These things are massive! It made me wonder what it cost to make these massive things. With a little research, I discovered the cost was approximately 10 billion dollars.

Only one company builds these aircraft carriers, that being Huntington Ingalls Industries, whom you have probably never heard of. I wanted to compare that to the annual cost of the SNAP (formerly known as food stamps) program. In 2016, 70 billion dollars was spent to feed approximately 45 million people (1 out of every 7 men, women, and children in the US).

Walmart received 18% of that money spent on food by the folks receiving SNAP. It’s interesting that the people with the greatest needs are in the same boat as the world’s largest retail corporation. Pepsi, Coca-Cola, Kroger, and Kraft foods have all spent significant amounts of money to lobby Congress to support SNAP in recent years.

The residents of Tennessee are the sixth highest recipients of SNAP benefits, ahead of only Mississippi, West Virginia, New Mexico, Washington, D.C., and Oregon. According to the USDA and the U.S. Census Bureau, 20% of the population in Tennessee receives SNAP benefits.

What do Huntington Ingalls Industries, Walmart, Coca-Cola, and Kroger have in common? The money that makes these corporations wealthy comes from taxes on the middle class.

The money for nuclear aircraft carriers comes from taxes on the middle class and goes straight to military contracts to build aircraft carriers. For companies like Walmart and Kroger, the money comes from the middle class, gets sent to those in need, and ends up in the hands of those at the top – like Walmart and Kroger.

Acting in good faith and certainly doing their jobs, nonetheless, it takes thousands of federal and state employees to act as the middleman for this transfer of wealth from the middle classes to the working poor and those in need.

The disappearing middle class is a serious problem which will ultimately change everyone’s life. While incomes have remained flat, the cost of about everything else important has continued to rise, particularly food and housing. When oil prices rise, which they will, it will get even tougher.

As Henry Ford stated, “If I don’t pay my employees well, how will they afford my cars”. Consumer spending is the driver of 70% of the U.S. economy. Since wages haven’t increased very much, the answer has been easy and relatively cheap credit. The substitute for higher incomes is VISA, low or no down payment cars and trucks, and historically low mortgage interest rates.

When the interest rates rise and cheap easy money dries up, many folks carrying too much debt will have hard decisions to make. We don’t need the economy to go into a tailspin. As we are seeing, when regular people lose their houses to foreclosure, these houses are bought and turned into rentals. This weakens neighborhoods and communities in the name of “gentrification”. What’s even scarier is that the people buying the foreclosed houses are super rich hedge funds from New York (Wall Street).

Wealth inequality is the elephant in the room that the ruling class does not wish to discuss. It makes them feel guilty and hypocritical, but not so ashamed that they wish to share any of their wealth.

According to a newly released report by the Institute for Public Policy, the 3 richest Americans (Jeff Bezos of Amazon, Warren Buffett of Berkshire Hathaway and Geico, and Bill Gates of Microsoft) together possess more wealth than the 200 million poorest Americans, or 2/3 of all Americans combined.

Poor, working-class young men and women bravely volunteer for duty in foreign lands while rich and powerful young men and women go to Ivy League colleges (Harvard, Yale, etc.) where they prepare to shape U.S. domestic and foreign policy to their advantage.

As opportunities dry up for most young men and women, the media is quick to celebrate the very few that make it big (Mark Zuckerberg / Facebook, Elon Musk / Tesla, etc.) and to bow at the altar of celebrity culture. I am not attempting to discourage ambition, I am simply observing how much harder it can be these days to start a business and see it prosper.

The trends and where we are as a society did not happen overnight, and it will be a long tough road to reverse these trends. It starts with each individual better understanding the world around them and then making smart decisions to protect themselves, as well as their families and friends from forces that [sometimes] can seem too powerful to change.

What can you do?

  1. Start an emergency fund of at least $1,000.00 (probably too little) to protect you from unexpected financial events.
  2. Don’t buy into every new idea that the media tries to sell you.
  3. Look at offers of any kind and from anyone with a skeptical eye, and ask yourself how really necessary it is.
  4. If you have a dream, follow it, but don’t necessarily jump into it. Keep your present job and gradually learn the ins and outs of your dreams.
  5. Pay attention to people’s acts, not their words.
  6. Try to learn a skill that sets you apart and makes you very necessary to someone (like your employer), and harder to replace with automation and computers.
  7. Believe in yourself. You and your ideas are more powerful then you can imagine.

I’ve only scratched the surface of wealth inequality and its psychological effects, and how you can defend yourself from it and cope with it. With laughter, almost any situation can be tolerable, and without laughter and some fun, every circumstance can become drudgery. Enjoy the rest of your day, but start thinking about some of these issues and how you can navigate a rapidly changing world.

James A. Flexer 11/7/17

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